MGEX Research

Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.

One Year in Particular:

Jul 08, 2010

Allendale Inc asked several multi-state agronomist what is most important to an annual corn crop and received the same response, “they are all important, but you can not have the others without the most important and that is planting pace”. Allendale Inc went back to 1987 and tried to find as many years possible which had similar planting pace, good to excellent condition and percent of silk and found one year which matches pretty close to 2010.

The year we found was 2004 with a 3% better planting pace than the 81% which 2010 held on May 9th. Present good to excellent crop conditions as of July 4th 2010 are 71% vs the 73% in 2004. The percent silk as of July 4th 2010 was 19% identical to 2004. We looked at a host of other years since 1987 but only 2004 came close to what is developing in 2010.

The present domestic stocks for corn are 1.573 billion and in 2004 end stocks for the June WASDE were 741 million bushels (in July revised upward by 250 million bushels). USDA had an excellent pace of planting, good to excellent condition ratings and percent of silk but did not raise its yield per acre of 145. Allendale Inc suggest USDA is unlikely to raise its yield per acre in the July WASDE report released the morning of July 9th.

The only similarities for weather in 2004 was a wetter and cooler than average summer, comparable to the summer of 2010.

In 2004 Dec futures were able to stage a rally of 8.8% during the summer with 2010 rallying 15.5% and then sold off into 2004 Dec futures expiration.

Just one idea you may want to consider is as follows: buy a 390 Dec put, sell a 340 put and sell a 450 call, for seven cents. The range of per acre return is $627.12 if corn futures were to be $3/bu and $826.70 if corn futures were to reach $4.50/bu. Allendale Inc has representatives which can explain our “Evaluator” for your particular business.

Questions you may want to ask are does planting pace, conditions and % silking matter to you and or the market? What if any marketing plan have you implemented? Do you have complete control of your risk?

Give theses questions and more you may have before USDA releases its July WASDE.

We welcome your questions.........Joe Victor

Allendale Inc welcomes any questions you may have by calling 800-551-4626 or

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2010

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Anonymous7/8/2010 11:19 AM

You obviously have your clients highly hedged. Were the crop ratings declining in 2004? Replants, preventative plantings? The pace will be the only similarity, the final yield will be below trend closer to 1995 and 1993.